The SCOR Model in Supply Chain Operations

Companies that sell products, services, hardware and software understand how important supply chain operations are in the success of their business. Operations management is no walk in the park — consider all of the challenges companies have grappled with in recent years due to the COVID-19 pandemic.

The global supply chain continues to deal with issues such as long lead times, labor shortages, COVID-19 shutdowns and bottlenecks at major ports. As a result, many companies implemented new technologies like artificial intelligence (AI), the Internet of Things (IoT) and various types of software solutions. 

Any professional in the industry knows that achieving maximum efficiency in supply chain operations is the ultimate goal. However, supply chain managers might not know how to improve their current processes and techniques. This is where the SCOR model comes into play.

Continue reading to learn more about the SCOR model, its use and its significant role in supply chain operations.

What is the SCOR Model?

The Supply Chain Operations Reference (SCOR) model is a helpful tool created by PRTM in 1996 that assists supply chain professionals in various ways. It was endorsed and developed by the Supply-Chain Council, with assistance from 70 of the world’s leading companies. The council is now referred to as the Association of Supply Chain Management (ASCM).

SCOR evaluates the performance of a supply chain, specifically in terms of its effectiveness and efficiency of sales and operational planning (S&OP). With the SCOR model, users benefit from a standardized supply chain evaluation process with measurable results. 

The SCOR model is extremely helpful for organizations looking to improve their supply chain operations. Businesses can use the model to determine how advanced a supply chain process is or if certain supply chain operations align with their business goals.

Outlining the SCOR Model

There are six essential management processes the SCOR model recognizes, including:

• Plan: Developing plans to operate a supply chain.
• Source: Activities associated with ordering, delivery, receipt and transfer of raw materials.
• Make: The conversion of raw materials into finished goods.
• Deliver: Creating, maintaining and fulfilling customer orders.
• Return: Handling the reverse flow of goods.
• Enable: All management activities, from data management to risk management and everything in between.

In a supply chain, these six elements must be executed properly to satisfy a supply chain’s main objective — to fulfill customer orders. The processes above are a part of the process modeling and re-engineering “pillar” of the SCOR model. 

Here are the other three SCOR pillars:

• Performance Measurements
• Best Practices
• Skills

Within the SCOR model, three levels measure performance (levels one, two and three). This framework allows businesses of all types and sizes to be compared to one another even if they operate differently.

There are more than 250 SCOR metrics businesses can use to measure performance. Each metric is categorized against five attributes, including:

• Reliability
• Agility
• Costs
• Management Efficiency
• Responsiveness

One major advantage of using the SCOR model is that it does not apply to one industry. It’s considered a cross-industry reference model and an invaluable diagnostic tool for supply chain management, an essential component of any business.

How the SCOR Model Can Improve Supply Chain Operations

Implementing the SCOR model alone is not enough for a company to make any meaningful improvements to its supply chain operations. However, using a KPI system in addition to the SCOR model can enable a company to optimize certain aspects of the supply chain.

Here are some ways a KPI system and SCOR model can provide value:

• Improve organizational performance using pre-modeled business processes
• Using KPI metrics to create a guideline of best practices, which increases efficiency
• Standardization of IT software and solutions to improve cross-company communications

While it’s not a new concept, SCOR is a game-changer for many organizations. It allows company leaders to identify common pain points in their supply chain operations that require viable solutions. When a company takes on a SCOR initiative, the results speak for themselves. Typically, results include:

• Operating income improvements
• Ongoing profit improvements (0.5%-1% annually)
• 2-6x ROI within one year
• Reduction in IT operational costs
• Improved return on assets regarding fixed-asset tech investments

The SCOR model applies to all types of supply chains. It’s also possible for e-commerce businesses to apply the SCOR model to their digital supply chain management strategy and make continuous improvements.

Training and Certification for the SCOR Model

The ASCM offers a SCOR-P certification through its SCOR Professional Program. SCOR-P education and training are specifically designed for supply chain professionals trying to understand SCOR, how to apply the SCOR model and how they can optimize their supply chain.

Supply chain professionals must pass the SCOR-P exam after completing a three-day in-house or public training option to receive the SCOR-P certification. The 2-hour exam is administered over the computer and consists of 60 multiple choice questions. 40% of the exam covers the SCOR model, and the other 60% covers information about SCOR projects. Candidates who score 300 points or above pass the exam, while anyone who scores 299 or lower fails it.

Supply chain professionals can search for local SCOR training classes in their area, but prices for training will vary. Companies looking for skilled supply chain professionals may prefer candidates with background knowledge of SCOR or the SCOR certification. 

Earning this ASCM certification can help supply chain managers, new or experienced, improve their marketability and further their organization’s goals.

Leveraging the SCOR Model to Improve Supply Chain Operations

Managing a supply chain comes with its fair share of challenges. Virtually every business with a supply chain knows how important it is to evaluate its effectiveness and efficiency regularly. 

The SCOR model is critical in supply chain operations and management processes, and it could serve as an invaluable tool for the majority of businesses with active supply chains. Supply chain professionals should consider applying the SCOR model next time they want to optimize their supply chain operations.